Van Wagenen: City's new home inventory being whittled down

Published: Sunday, August 24, 2008

While FannieMae, FreddieMac and the rest of the nation's greedy mortgage lenders were bundling up and selling off billions in worthless paper, there was at least one city that opted against getting into that game.

While Lubbock isn't setting any records, you, as homeowners, should be gleeful.

During the past year, the Hub City has absorbed a bunch of new-built, speculative inventory that could have been on the market there for years, dragging our entire housing market into the abyss.

While states such as Arizona, California, Florida, Georgia and Ohio, just to name a few, were putting people in homes who should have stayed renters, Lubbock's mortgage community stuck to its conservative lending practices.

We know that based on the latest Lubbock Land Co. biannual survey that found:

 Year-to-date new housing spec (homes built without buyers) fell by a whopping 25 percent.

 During the past 30 months, Lubbock has sold more homes than it permitted.

 Homes valued at $250,000 fell from an alarming 11-month supply to six months.

 MLS home sales through June 30 rated as the second best ever seen in the marketplace.

 Completed homes in inventory (all prices ranges) fell 18 percent from 147 to 121 between June 2007 and 2008.

 Most astonishing is that homes under construction (June to June a year ago) fell 29 percent - 260 to 184.

"I see a market out there that is monitoring itself," said Charlie Hamilton, president of LLC, whose company is developing Regal Park in Southwest Lubbock and Cooper Ridge in South Lubbock.

"Our MLS inventory (all price ranges) is 5.6 months. That's the lowest in the state ... and our (home construction) permits are down 11 percent. We're not setting any records out there, but we are holding our own," Hamilton said.

Want another telltale sign of our housing market?

Our second-quarter foreclosures were down, albeit slightly, from 116 in June a year ago to 112 for the same reported period.

"These are all good signs," Hamilton said. "It also tells me our home inventory right now is within historical norms."

For example, LLC's computer model pegs the city's average (annual) home permit level over a 20-year period at 759 - 10-year level at 950.

"If you look at that historical average, that's exactly where we should be and that's exactly what we're doing," he said.

Hamilton gives credit to builders (in particular established ones) and the banks which control the money, who together are making the market work.

"If this were a (football) play, this is exactly how you want to see a market work," Hamilton said.

By the time the nation's subprime mess is cleaned up, Lubbock will be up and running into, dare I say, another housing shortage.

Find out what else is happening in local business on Chris VanWagenen's blog, Open for Business, at www.lubbockonline.com.